Monday, September 22, 2008

Financial Upheaval and Leadership Matters

The US financial world went through a tumultuous upheaval last week. The colossal AIG nearly collapsed and was rescued by the powerful US Federal reserve and Treasury Department. I think it is the beginning of an end. The US situation is rapidly affecting the rest of the world. The common people's confidence has been shaken. For example, in Singapore, more than 5000 policies (and counting) have been terminated. In Europe, shock waves were felt from the unprecedented Fed move. Meanwhile, the fallout continues. Just today, it was announced that the Wall Street era of US investment banking have finally ended. The last two titans, Morgan Stanley and Goldman Sachs have abandoned the sinking Investment-Banking titanic, and jumped aboard a more stable but highly regulated banking structure. The question is, how could huge companies and their reputations built up over so many decades collapse within days? Answer: Little by little over the years. Last week was what we call the tipping point. Ed Brenegar suggests that the main reason is the lack of accountability and the presence of greed.It is also political. Jeff Vail agrees, and gives us a helpful description of how such credit derivatives devices work and the inherent risks that come with it. Without over-simplifying the matter, I think it has got to do with some form of lack of accountability required when no one is looking. Character and integrity are two of the most crucial aspects of leadership. Who are you when no one is looking? This is the key question that Os Guinness poses to leaders and leaders-to-be. Thus, the true test of leadership is who we are on the inside. Guinness asks three important clarifying questions to zoom into the character question.

1) What is character?
2) Why is the understanding of character so confusing today?
3) Why character matters?

I will focus on the second question, as there is some relevance to the financial setbacks from last week's crazy rollercoaster ride. Moreover, these have deep implications for leadership in general for the society in our day. Guinness argues that there are at least 6 reasons for the confusion over character need.

1) Changes in the Cultural
2) Caught up in controversy
3) Craze for power
4) Contrived, not real
5) Closed institutions in an open society
6) The conundrum of perversity.

The present culture dare not boast of any William Wilberforce or Abraham Lincoln. In fact, I will not be surprised that the first response by anyone in crisis is not a phone call to a leader figure, but a immediate click on the Internet via the Google search engine. Together with an increasingly individualistic and self-sufficient culture, people self-medicate, make purchases online, buy Do-It-Yourself furniture and buy instant meals all without any expressed need to relate meaningfully to another person. The result is the fragmentation of societies created by rusty human hinges that lacks the oil of human fellowship and social concerns. Guinness quotes a survey from a journal:
" the period 1890-1910 at least a third, or 33 percent, of the articles were on character. Yet suddenly by 1920 the number collapsed to 3 percent." (Os Guinness, When No One Sees (Navpress, 2000), p19)
In another survey,
"Studies of Middletown USA show that, whereas, 54 percent of the people in 1924 said they valued 'strict obedience,' that number had fallen to 25 percent fifty years later. In this later survey, 76 percent said they valued 'independence' and 47 percent 'tolerance.'"
This is alarming. Independence to do what? Tolerance about what? Perhaps independence to do whatever-that-seems-right-in-their-eyes (remember the book of Judges?) and accepting mediocre results and efforts in the name of tolerance? Financial prudence must include accountability and firm corporate governance.

The second worrying factor is the tendency for people to get caught up in controversy. People argue on the matter of principle and derails many from the main track. For instance, controversy over homosexual matters suddenly become the main issue. How does that play in discipleship matters? Don't get me wrong. Obeying what the Bible teaches is important. My concern is the tendency for people to get so caught up with domestic interpretive issues that they forget that millions of people out there have not yet heard the gospel. Which is more urgent? You tell me.

Thirdly, the power factor. Politics is a dirty business, so says many people. Put in one hundred innocent persons through the cave of politics and out comes nearly as many personalities more concerned with power issues rather than people matters. Political concerns are important but character traits are more important. True leadership is not synonymous to powerful political status. The sad thing is that power-hungry people tend to put on a facade of strength and pander to the wishes of popular opinion. When one is filled with power, where is the need for authentic character-based leadership?

Fourthly, if it cannot be real, contrive it. Keeping a good public image becomes paramount. Faking and flaunting it under the guise of style and display exceeds the expectations of the ordinary TV-fied generation. Life is not TV. Guinness says that style is the 'lifeblood' of modern politics. I think of Carly Fiorina (ex-CEO of Hewlett-Packard) who thrusts a venerable technology icon into Hollywood-style popularity. I think of David Beckham, whose boyish charm exuberates more fashion appeal rather than his footballing skills which was his foundation to fame in the first place. At last check, his current team, the LA Galaxy is at the bottom of the soccer league table after a streak of 12 winless games. Unfortunately, popular opinion chooses the facade over facts. They prefer movies where heroes miraculously miss hundreds of bullets without a scratch. They love news which highlights the sensational and the extraordinary. Unfortunately, these do not represent the real life. The mass media, in desiring to capture a larger market share chooses to print and splash bedroom details of high flying politicians and Hollywood stars instead of poverty and justice in the impoverished parts of the world. With the stakes so high, isn't it then any surprise that the first thing politicians tend to do is to cover up? Look at the recent case that surrounds John Edwards?

Fifth, Guinness accuses traditional institutions like churches and synagogues for becoming too accommodating of modern culture. Instead, these institutions are marching off to a 'different drummer.' The foursome relay team of dedication, discipline, self-sacrifice and honesty have been overtaken by a more seductive quartet of choices, convenience, self-indulgence and showmanship. However, do not fret. While tradition has been overshadowed and overtaken by fashion and fad, the race is not over. There is still hope.

The sixth factor is the perversity inclination. People have a strange fascination for weird stuff. The Brangelina interest and the constant headline news on Britney Spears' messy life seems to feed public curiosity on a minuscule portion of what is happening in the world. Imagine 90% of the public knowing more about 0.01% of the world? We call that education?

Having listed these six factors that contribute to confusion about character matters, I would like to add a seventh: The loss of a vertical focus, while we gets embroiled in horizontal issues. Essentially, when we lose the awareness of the divine, that we are first accountable to God, we lose our personal ability to check ourselves. Who are we when no one is looking? We can do sneaky things when no one is looking. That is why we need accountability partners. What if we do not have another human person at any one time? When we know that God is looking, we will know that we have to be honest and faithful to God first. A word about the Church. When things in the church seems to be going well, this is when we must pray and seek God even more. Do not fall prey to the enticing charms of convenience, popularity, free choice, self-indulgence and fame-fad showmanship. These things are temporal. On the other hand, it is the bit-by-bit exercise of dedication, discipline, self-sacrifice, honesty and accountability to one another that will build up the church. It has more permanence and relevance to the expansion of the kingdom of God.

In summary, the financial mess from last week is but another depressing case of leadership failures due to the accumulation of lax controls and weak leadership. It is not restricted to any one person. Leadership can be in the form of individual decisions built up over the years. Sadly, many such decisions come from a confusion of what a leader should be, and the falling into the temptation of showmanship rather than character. I end with a quote from King David, who prays frequently and displays his character not before men, but before God.
"O LORD, you have searched me and you know me. You know when I sit and when I rise; you perceive my thoughts from afar. You discern my going out and my lying down; you are familiar with all my ways. Before a word is on my tongue you know it completely, O LORD." (Ps 139:1-4)
If we can live as honest people before God, we will be able to live as honest people before men.


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